Unemployment is a major source of unhappiness, mental ill-health, and lost income. Yet after a century of economic research on the topic, the determinants of the equilibrium or natural rate of unemployment are still imperfectly understood, and unemployment levels in the industrialized nations are today 10%, with some nations over 20%.2 The historical focus of the research literature has been on which labor-market characteristics – trade unionism, unemployment benefits, job protection, are particularly influential. We explore the hypothesis that high home-ownership damages the labor market. Our results are relevant to, and may be worrying for, a range of policy-makers and researchers. We find that rises in the home-ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: a doubling of the rate of home-ownership in a U.S. state is the long-run by more than a doubling of the later unemployment rate. What mechanism might explain this? We show that rises in the home-ownership lead to three problems: (i) lower levels of labor mobility,(ii) greater commuting times, and (iii) fewer new businesses. Our argument is not that owners themselves are disproportionately unemployed. The evidence suggests, instead, that the housing market can produce negative ‘externalities’ upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known.